States, not Congress, can thwart healthcare law

The GOP took control in many capitals, where those in power will decide how to follow the new rules.

Reporting from Washington and Chicago — House Republicans swept to power Tuesday with promises to roll back the new healthcare law and subject its creators to a merciless round of congressional investigations.

But the fate of President Obama's sweeping overhaul will probably be determined not in Washington but in state capitals across the country, where the GOP also scored dramatic victories.

Republican governors and legislatures, who are charged with carrying out crucial parts of the law, will be in a position to put pressure on the White House to scale back some plans, including the extension of government-subsidized health benefits to millions of uninsured Americans.

State Republicans could also temper insurance regulations and compel a relaxation of new mandates set to take effect over the next few years.

And by joining a multistate legal challenge, Republican governors may further embolden conservative judges to invalidate a new requirement that Americans get health insurance beginning in 2014, a key pillar of the healthcare law.

The governors-elect of Kansas, Oklahoma, Wisconsin and Wyoming have already indicated they want to join the 21 states suing over the law.

"While there are some important decisions still to be made in Washington, the real action is out in the states," said Alan Weil, executive director of the National Academy for State Heath Policy.

With Democrats in control of the Senate and President Obama sure to veto any healthcare repeal, House Republicans have little power to force many changes from Washington.

But Republicans gained at least 11 governor's offices last week, while losing three, flipping states such as Wisconsin and Pennsylvania where Democratic governors had been moving aggressively to implement the new law.

The GOP will also control state legislatures in at least 25 states next year, up from 14. Among actions expected of the states under the law are creating state-based insurance exchanges in which people who don't get benefits at work would be able to shop for health plans starting in 2014.

Many of the newly elected officials, such as Florida Gov.-elect Rick Scott, ran blistering campaigns against the healthcare law. Scott, a former hospital executive who personally bankrolled one of the first ad campaigns against the healthcare bill in 2009, has called the law the "single largest government power grab in history."

However, Weil and other healthcare experts who are working with states say it is unlikely that even the most critical Republican politicians will simply refuse to implement the law.

GOP officials in many states that are fighting the law in court — including Virginia, Florida, Louisiana, Minnesota and Nevada — have already convened healthcare task forces to work on the overhaul.

"If I had been a member of Congress, I would have voted against the law," said Louisiana Insurance Commissioner James Donelon, a Republican. "But it's the law, and we will comply with it until and unless the courts or Congress change it."

Republican governors have another incentive. The new healthcare law authorizes federal officials to operate an insurance exchange in any state that chooses not to do so.

"Having the federal government march in" is not appealing to many state leaders, said Timothy Jost, a law professor and consumer representative to the National Assn. of Insurance Commissioners.

But resistance to the new law has already emerged in several statehouses. Legislatures in Minnesota and Rhode Island in the last year have rejected bills to create insurance exchanges.

In California, legislation creating an exchange passed without a single Republican vote in the Senate.

Now, several governors are also looking at ways to slow down a major expansion of the Medicaid program, the federal-state insurance program originally designed for poor children.

Beginning in 2014, the law directs states to open Medicaid to all low-income residents, a move that is estimated to cover an additional 16 million people by 2019.

While the federal government is to provide most of the new funding, some state analysts predict it will be difficult for financially strapped states to shoulder even a small increase.

"This recession was so big and broad and wide that it will have repercussions for a decade or more," said Ray Scheppach, executive director of the National Governors Assn.

State lawmakers may also resist efforts by the Obama administration to expand state oversight of insurance premiums, a key goal of the new healthcare law. Bills to strengthen state regulation were recently quashed in California and Pennsylvania.

Some state insurance commissioners are also looking to petition the Obama administration to delay other new regulations that require insurance companies to spend more on their customers' medical care.

Maine was the first state to make such a request, citing concerns that the requirement set to take effect in January would force insurers to flee the state, leaving consumers with fewer choices.

Other states are expected to seek waivers from the so-called medical loss ratio provision in coming months.